What You Should Know About Rising Mortgage Rates
Mortgage rates have started to increase recently after steadily declining throughout the winter. Some people who want to buy a home are worried about this because higher mortgage rates and higher home prices have made housing less affordable. So, if you’re planning to purchase a home this year, you too may be wondering if now’s the right time to buy or if you should hold off on your search until rates come back down.
The recent uptick in rates has been driven by what’s happening with inflation. Joel Kan, Vice President and Deputy Chief Economist at the Mortgage Bankers Association (MBA), explains:
“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time.”
The most recent average weekly 30-year fixed mortgage rate reported by Freddie Mac is 6.5%. It’s the third week in a row that rates have increased and puts them at the highest point they’ve been this year (see graph below):
Advice for Home Shoppers
If you’re thinking about pausing your home search because rates have started to go up again, you may want to reconsider. This could actually be an opportunity to buy the home you’ve been searching for. According to the MBA, mortgage applications declined by 13.3% in just one week, so it appears the rise in mortgage rates is leading some potential homebuyers to pull back on their search for a new home.
So, what does that mean for you? If you stay the course, you’ll likely face less competition among other buyers when you’re looking for a home. This is a welcome relief in a market that has so few homes for sale.
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